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A summary of Q1 2022 on the polish retail market

Ewa Derlatka-Chilewicz • 05/05/2022
Only 30,000 sq m of retail space was delivered in Q1 2022 through three new projects and a shopping centre extension. Retail parks account for over 65% of the development pipeline. Retail sales in constant prices in February and March 2022 improved by 8.1% and 9.6% year-on-year, respectively. Retail footfall in March 2022 averaged 372,000 shoppers per retail scheme, representing a decrease of 4% on 2019. Average turnover for shopping centres in February 2022 was up by 2% year-on-year.

Impact of the high supply continues from Q4 2021

Only 30,000 sq m of modern retail space came on stream in Q1 2022. The low volume of completions is a function of both very healthy supply levels in Q4 2021 and construction project delays.

The new supply was delivered in three new developments and an extension of a shopping centre located in Kołobrzeg, Warka, Sierpc and Tychy. Poland’s total retail stock now stands at over 15.5 million sq m.

350,000 sq m in the pipeline at the end of March 2022

At the end of Q1 2022, 350,000 sq m of retail space was under construction and scheduled for delivery in 2022-2023 through 25 projects, including 12 extensions and three redevelopments. The largest projects underway include the 25,000 sq m extension of the Atut Ruczaj shopping centre in Krakow, Galeria Bawełnianka in Bełchatów, the second phase of the Karuzela shopping complex in Kołobrzeg and DOR Plaza retail park in Częstochowa.

“Over 55% of the retail development pipeline will be delivered in smaller cities with a population below 100,000. Going forward, we will continue to see convenience shopping centres and small retail parks being added to the existing retail stock. Retail parks account for more than 65% of the development pipeline, with over 30 new completions or extensions expected in the coming years,” says Ewa Derlatka-Chilewicz, Associate Director, Cushman & Wakefield.

Poland attracts new brands

Two new brands entered the Polish market in Q1 2022. One was Philipp Plein, which opened its first monobrand boutique at Plac Trzech Krzyży in Warsaw, and the other was Snipes, the German-based sneaker and streetwear retailer, which took over Distance S.A. and its chain of 31 stores in late 2021.

Other newcomers expected to establish their presence in Poland this year include Butlers, DM, and Less.store.

Retail sales up by 8.1% on February and March 2021

Retail sales in constant prices in February and March 2022 improved by 8.1% and 9.6% year-on-year, respectively. The strong performance in March is particularly noteworthy against the benchmark – the 15% plus growth in retail sales in March 2021. The strongest growth in March 2022 compared to March 2021 was reported for textiles, fashion and footwear (up by 42%), pharmaceuticals, cosmetics and orthopaedic equipment (16%), fuels (15.5%), as well as newspapers, books and specialized stores (7.3%).

Online shopping still popular

Online retail sales increased significantly during the pandemic – the online penetration rate peaked at 11% during the ban on brick-and-mortar retailing before falling back to around 8% with the easing of restrictions. The average share of online sales as a proportion of total retail spend began to trend upwards in November 2021, reaching around 10% in Q1 2022.

“In comparison with the UK, the most developed e-commerce market in Europe, Poland is currently reporting the online penetration rate recorded by the UK in 2013. The gap, however, varies by product category. Fashion retailing is the most mature segment as it saw over 25% of sales take place online in the last 12 months, only 2.5 pp shy of the UK’s level. The largest gap between the Polish and UK markets, standing at close to 10 pp, is for groceries. The online penetration rate for food, beverages and tobacco is under 1%,” says Beata Kokeli, Partner, Head of Retail Agency Poland, Cushman & Wakefield.

Footfall in large shopping centres exceeds pre-pandemic levels

At the end of Q1 2022, the average retail footfall stood at 372,000 shoppers per retail scheme, down by 4% on 2019. It is, however, worth noting that last year’s footfall volumes fell more sharply, averaging 32%.

While the numbers of consumers entering shopping centres in January and February 2022 were disappointing, March 2022 saw a strong recovery in retail footfall. Large and very large shopping centres (40-60,000 sq m of floorspace and over 60,000 sq m, respectively) outperformed, attracting 2% and 3% more customers than in the pre-pandemic year 2019, respectively.

Cumulative turnover for 2021 sees an uptick compared to 2020

Turnover data for shopping centres shows that retail sales were up in February 2022 by 2% year-on-year, but down by 4% on the same month in 2019. Net retail sales in March 2022 averaged close to PLN 670 per sq m of GLA. Although the improving footfall is expected to support retail sales in the coming months, the overall economic deterioration and the rising inflation curtailing the spending power of Polish consumers are likely to affect tenants’ turnover levels.
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